Dream It, Dare It, Do It – a message to the Chancellor
Having recently attended an EOA member’s event, entitled, ‘Dream It, Dare It, Do It’, I was left wondering what I might dream the Chancellor could dare to do in his budget this week to enable more employee ownership in the UK.
As we seek answers to the UK’s ‘productivity puzzle’, there is stubborn inequality in prosperity between London and the rest of the UK, and the corporate behaviours of some of the UK’s largest businesses continue to disappoint, the Chancellor has a unique opportunity in this week’s budget to make a difference.
Undeniably, Government’s voice is important and is listened to. Therefore, a signpost in the Budget that acknowledges the increasing contribution of employee ownership to the UK economy would have powerful impact. It would help to address the stubborn challenge faced by the sector of a lack of awareness, putting it on the radar of more accountants, compelling them to join the early adopters to find out how employee ownership could support their clients’ business challenges and encouraging more funders to learn about employee ownership so they can support the sector’s finance needs.
Like any substantial sector of the economy, this sector is confident of its proposition. However, having completed the first stage of the Ownership Effect Inquiry, hearing from more than 100 businesses, the evidence is now even stronger and in particular, in three areas, that are of great relevance to the Chancellor as he delivers a budget that will seek to sustain and grow the whole of the UK economy.
Firstly, employee ownership is a growing and diverse sector. It exists in every part of the economy, in every region and in every size of business. However, it is especially prevalent in SME and family owned businesses, where it is directly supporting the successful transition of businesses from one generation of owners to the next, and helping to support scale up and growth ambitions.
This is especially important when considering that two thirds or 4.7 million businesses, are family owned, as reported by the Institute for Family Business and the report earlier this year of the lack of business succession planning in the UK’s family owned businesses. Equally important to the future of SME’s are the ambitious plans of the Government-supported Scale Up Institute and the opportunity for employee ownership to play a critical part in engaging the entire workforce behind a growth or scale up plan.
Secondly, employee ownership is a growing feature across every regional economy. With the ability to help root businesses in a place for the long term, unlike trade sales which often result in a loss of a business or jobs, employee owned businesses contribute to more sustainable economies, with their higher levels of resilience and their longer-term orientation. This is especially important beyond Brexit, and as part of the move to greater devolution and localism which is seem in the work of the Local Enterprise Partnerships (LEP) and Growth Hubs.
Thirdly, businesses that transition to employee ownership often cite the resulting effect of performance growth, including higher levels of profitability and productivity, delivered through the additional discretional efforts of employees as they feel the effects of ownership. And of course, this is combined with better corporate governance, the compulsion to engage more widely with all of their stakeholders, to be more transparent, and as I have written about previously, to result in higher levels of trust.
So what could I dare to dream for from the Chancellor this week?
That the UK Government officially recognises the employee owned sector, and in doing so advocates and champions it via a nominated Ministerial lead.
That through this recognition, there is broad consideration of employee ownership in all policy development, and especially as HM Treasury goes about its important work of shaping the tax environment to deliver the most sustainable economic returns.
That employee ownership as a solution to business succession and scale up becomes embedded as part of the support offered by LEPs, so that every business owner is able to access advice and understand its relevance to them, from a local champion.
And that until such time as there is more widespread understanding amongst the mainstream banks of employee ownership, that there is support for the financing needs of the sector, with government-supported banks offering suitable products and security.
Employee ownership is not new; it is tested and tried and has credentials that can be seen in every sector of the economy. But just like many ideas that have yet to transcend into the mainstream, it needs government to use its voice, its influence, its advocacy and its convening power in order to realise its potential for the benefit of the UK economy.
My dream therefore is that Mr Hammond realises this opportunity and uses his influence to help unlock the sectors potential, and deliver more employee ownership.